(Anti-)labor unions

Last week I was invited to John Stossel's show on the Fox Business Channel. One of the participants in the discussion on "Bankrupting America" introduced himself as a non-partisan think-tank expert on American labor history. Jumping up and down in his chair, the guy was obviously on a crusade to convince the audience that the birth and the expansion of the middle class are due solely to labor union activism. As much as I admired his youthful enthusiasm, it was sad to see that his strongest argument was the assertion: "That is the history and you cannot prove me wrong!"

As an economics professor I teach the colorful history of guild regulations from the so-called "Hippocratic" oath in ancient Greece to the American Medical Association, from the medieval guilds to the American Federation of Labor and Congress of Industrial Organizations. Hoping that my mom, a retired Bulgarian public education union boss, will never see the show, I asked the non-partisan expert to convince me in a few words that organized labor groups have been good for all working people instead of benefiting their members at the expense of taxpayers, consumers, and non-unionized employees. His answer: American unions have pushed for federal legislation, forcing many employers to pay higher wages and provide better working conditions. Again we were told: "That is the history and you cannot prove me wrong!"

At least I did not have to prove him wrong; he had these facts right. What he did not have was the real history of the rise of the middle class in the West and an understanding of the unintended consequences of labor market regulations. As an economic historian, my main area of research is the evolution of entrepreneurial incentives within a framework of market and political institutions conducive to the rise of the middle class. It all started with placing constitutional limits on the role of government in the economy back in early 13th century England. And the only reason why modern guild members push for legislation that increases labor costs for employers (minimum wages, OSHA, trade restrictions, etc.) is to insulate themselves from the competition of less productive workers.